Plans to Overtake Saudi Petrochem Output Soon

Plans to Overtake Saudi Petrochem Output SoonPlans to Overtake Saudi Petrochem Output Soon

Thanks to its plentiful supply of natural gas, Iran will soon overtake Saudi Arabia in petrochemical output, an official at the National Petrochemical Company said.

“Saudi Arabia's SABIC is not half as appealing as Iran's petrochemical industry to foreign investors, which explains why Saudis' plot to undersell SABIC's assets cannot change foreigners' mind to return to Iran's untapped lucrative market," Mohammad Hassan Peyvandi, acting director of NPC, also told Mehr News Agency.

"Having access to huge natural gas reserves, sharing a coastline with the Persian Gulf and the Sea of Oman, and its location in the vicinity of international markets have given the state a competitive advantage and encouraged foreigners to transfer their cutting-edge technology to Iran," he said.

Pointing to the fact that higher profit margin normally attracts investment, the official noted that Iran's petrochemical investment objectives will be accomplished in post-sanctions era on condition that potentials and capacities are fully utilized.

Stressing that Iran's petrochemical production volume will exceed 120 million tons by 2020, Peyvandi said based on projections, the capacity can be expanded by as much as 180 million tons per year by 2025.

"Diversity of Iran's petrochemical industries' feedstock is definitely a bargaining chip compared to that of Saudis'," he said, noting that Iran's petrochemical feedstock comprises ethane, gas condensates, liquefied gas and naphtha, whereas the only feedstock Saudis can rely on is their crude and the liquefied gas extracted simultaneously with the oil.

Peyvandi believes that Saudis' high petrochemical output will definitely experience a decline as soon as they reduce their crude production since their petrochemical industry is heavily dependent on the oil extraction volume, currently standing at 10 million barrels a day.

According to the official, to compensate for the lack of natural gas resources, Saudis have embarked on building refineries, installations that manufacture petroleum products from crude oil, unfinished oils, natural gas liquids, other hydrocarbons and alcohol.

Nonetheless, not having access to natural gas as feedstock is still their Achilles' heel, no matter what measures they adopt.

Commenting on production of low value-added commodities in Saudi petrochemical plants, he said, "The Arab state's petrochemical value chain is not developed and they are not capable of manufacturing high value-added materials like propylene."

Peyvandi noted that in the Arab state, all complexes are being built and exploited by foreigners and Arabs themselves play the slightest role in the production process.

"This is while in Iran, lots of equipment and materials have been indigenized with the help of domestic experts and foreigners only finance the projects," he said.

According to Fariborz Karimaei, the acting head of the Association of Petrochemical Industry Corporation, increasing production capacity and diversifying export markets should top NPC's macro policies.

"Such objectives cannot be accomplished unless plans are made to attract foreign investment by developing petrochemical infrastructures and cutting red tape to facilitate the transfer of cutting edge knowledge to Iran," he said.   

"Numerous investors have shown interest in embarking on petrochemical projects."

Marzieh Shahdaei, managing director of National Petrochemical Company, believes that the dull economic climate during the last few years has caused downstream industries to experience a deep recession.

In fact, such industries have not developed enough due to lack of access to special materials such as propylene. In other words, as soon as more propylene is produced domestically, downstream industries will improve faster.

Shahdaei said plans have been devised to provide enterprises with much-needed natural gas as feedstock only if they can complete the petrochemical value chain, which is producing goods whose value added is high. In other words, the units that intend to produce just methanol or ethylene will not be provided with as much natural gas as they need.

"Plans call for increasing the production of propylene by 3 million tons per annum."